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malonade

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Nov 23, 2007
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Austin, Tx
I have an idea for a business, in which I would sell a certain type of product on each of multiple websites. For example, I would sell widget #1 on widget1.com, widget #2 on widget2.com, etc....but all are owned and operated by the same one legal entity. Is this a good structure to follow? What I was thinking was that my business act as sort of an umbrella company which produces these various un-related products. All of the varying websites would fulfill orders through one merchant account.

Any thoughts?

Thanks!
 

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andviv

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Diane, u da bozz... done. Thread moved.
 

Diane Kennedy

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Aug 31, 2007
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I have an idea for a business, in which I would sell a certain type of product on each of multiple websites. For example, I would sell widget #1 on widget1.com, widget #2 on widget2.com, etc....but all are owned and operated by the same one legal entity. Is this a good structure to follow? What I was thinking was that my business act as sort of an umbrella company which produces these various un-related products. All of the varying websites would fulfill orders through one merchant account.

Any thoughts?

Thanks!
The safest route would probably be to go with something called a Series LLC. This is an interesting hybrid - it is actually only one entity for tax purposes (saving a whole bunch of tax return filings) but each part of the Series LLC can be separated out for asset protection purposes.

To be honest, I'm not sure why you would need that much asset protection unless there is some product liability associated with the widgets.

The most common use I've seen of the Series LLC is for real estate investors who own multiple properties. Rather than have a whole bunch of individual LLCs for the properties, they get a Series LLC for less initial cost and less cost to maintain. The properties can each have their own individual "LLC" within the series.

Rereading your post, though, I see that you're also doing manufacture. At some point if you have a bunch of equipment and other assets, you may want to protect those assets in a separate entity.

BTW I'm using "LLC" here - remember an LLC elects how it wants to be taxed. Typically you want a business in an S Corp or C Corp structure to avoid self-employment tax. You'd just elect that type of tax treatment with your LLC.
 
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malonade

malonade

New Contributor
Nov 23, 2007
10
5
20
Austin, Tx
The safest route would probably be to go with something called a Series LLC. This is an interesting hybrid - it is actually only one entity for tax purposes (saving a whole bunch of tax return filings) but each part of the Series LLC can be separated out for asset protection purposes.

To be honest, I'm not sure why you would need that much asset protection unless there is some product liability associated with the widgets.

The most common use I've seen of the Series LLC is for real estate investors who own multiple properties. Rather than have a whole bunch of individual LLCs for the properties, they get a Series LLC for less initial cost and less cost to maintain. The properties can each have their own individual "LLC" within the series.

Rereading your post, though, I see that you're also doing manufacture. At some point if you have a bunch of equipment and other assets, you may want to protect those assets in a separate entity.

BTW I'm using "LLC" here - remember an LLC elects how it wants to be taxed. Typically you want a business in an S Corp or C Corp structure to avoid self-employment tax. You'd just elect that type of tax treatment with your LLC.
Diane,

First let me say that I love your books, and thank you for replying to my query.

I am a Graphic Designer by trade/heart, or just a designer in general. These products are ones that I would design myself, and maybe one category of product out of three or four would actually be produced by myself. The others would be manufactured by vendors.

My thoughts for this grouping of products is that they are all part of a larger brand, but don't relate to each other. For example, Levi Jeans is a brand which sells jeans, t-shirts, polos, etc. What I'm thinking of is something as such: Let's say Levi Jeans was known just as Levi's which we will call the umbrella company. Then on part of the Levi's brand is Levi Jeans, then another, unrelated section would be Levi Shirts, and so on. However my products wouldn't be related such as jeans and t-shirts are.

My goal is simply to just set up one entity which would use all of the same resources for each of the differing product categories I have in mind, from the use of the same office space, employees, and materials (whether they be shipping materials, office supplies). So you might be asking, "Why not separate all of these product classes out into their own entities?" All of my products would be designed by myself, and would like to develop a singular brand. I just wish to employ multiple websites to sell each of the differing product classes which really would not fit together on one retail site, so as not to confuse the customer as to what the focus is.

Diane, the Series LLC is an interesting topic, which I have not heard of before. The one product category that I would be manufacturing myself would come later in my plans, as I will be developing the other products first. I can see the use of a Series LLC in the future as I acquire manufacturing equipment directly related to each of the specific products I will develop. To start out, I won't have such equipment to protect. Could I make the move from either an S or C-elected LLC to a Series LLC?

Hopefully this all makes sense. Thanks for your help!
 

Diane Kennedy

Bronze Contributor
Aug 31, 2007
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Could I make the move from either an S or C-elected LLC to a Series LLC?
I'll give a tentative "yes". According to federal law - no problem. The issue right now is with California. Actually, I should say, yes you can do it, but there may be tax considerations if you do with California. I haven't researched every state, so please check with someone in your area before you do that.

I have another suggestion that would make it easier, though - start with an LLC that elects S Corp or C Corp status.

Sorry to be so cryptic on this. It's actually funny because I'm writing up my blog entries for my website for the week right now and I'm planning to do one on this very issue. I'll post highlights when I get it all straight in my mind. :idx:
 

TaxGuy

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Another great resource for those looking to start a biz in the 30DC....

While ItsMyLife and I might each start our own site, it still looks like for now just to start building up revenue an s-corp is the best bet, but if we decide to start doing several stores like Lighthouse or biophase, then series LLC looks like the best bet.

I'd also like to see what JScott's views are on series LLC for his REI ventures, I believe I saw on his blog that he has a separate LLC for each property, but is this part of a series or just separate LLC's for each?
 

speed-racer

New Contributor
Jul 6, 2009
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Cleveland, OH
Hi malonade.

Just from a simplistic viewpoint, I see a single company with multiple products, whereby each product has its own website with their own E-mail structure, customer service, etc.

Of course, you could segment your parent company into divisions, but is it really necessary to have separate business entities? In many cases, not, but I don't know enough about your situation.

But in general, keep it simple if at all possible.

HTH
 

biophase

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Another great resource for those looking to start a biz in the 30DC....

While ItsMyLife and I might each start our own site, it still looks like for now just to start building up revenue an s-corp is the best bet, but if we decide to start doing several stores like Lighthouse or biophase, then series LLC looks like the best bet.

I'd also like to see what JScott's views are on series LLC for his REI ventures, I believe I saw on his blog that he has a separate LLC for each property, but is this part of a series or just separate LLC's for each?
You can just have one LLC. The actual website itself is just an avenue to sell your products. Just because you have 2 websites doesn't mean you have 2 separate businesses. There are single companies that have hundreds of retail websites.
 

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